Uncle Sam has lent $10 billion to fund the rise in California workers’ claims for unemployment insurance after the Great Recession arrived when home prices crashed. This train wreck revved up our state borrowing from the feds.
What we have here is an opportunity. Bear with me.
First, let us put Uncle Sam’s bailout of jobless workers in the Golden State into context. The total amount is far smaller by an order of magnitude than the hundreds of billions of dollars our federal government threw at mega-banks whose mortgage-backed securities rated AAA by agencies such as Moody’s blew up and led to the deepest downturn since the 1930s.
The bottom line is that Bank of America and other behemoths whose business practices led to the near meltdown of the global financial system stayed in business as private entities. Not quite so fortunate in California and across the US are and were folks who lost their jobs to struggle with un- and underemployment.
Part of the California story on borrowed federal aid for unemployment insurance is that the state Legislature upped the maximum jobless benefit from $230 in 2002 to $450 in 2005. Funding for the program comes from a payroll tax on employers.
Reflecting the power of employers and labor unions, state lawmakers did not raise the employer-funded payroll tax to cover this increase in jobless benefits. As a result, in the post-home crash era, we have growth of UI-driven borrowing after unemployment spiked to 2 million in June 2009, down to 1.7 million this April.
However, the fundamental problem that shapes employment growth in California continues to be a weak recovery. It has battered consumer’s buying power that buoyed for a time by inflated home-prices.
This wealth could not last. Hindsight is plain as day, you know.
Meanwhile, the state job’s crisis pivots on this question. What can replace lost home wealth to motivate businesses big and small to increase their demand for new goods, services, and workers?
What are the details that matter for policies to turn things around? Another question is what will California’s labor unions do to back job growth policies and politics that improve employment chances for all who are out of work, the vast mass of whom are non-union workers once on private-sector payrolls?
There is precedence in part of the answer. Consider this.
Labor unions promoted job growth for Americans in and out of the rank-and-file membership during the Great Depression. As a result, the federal government created the Works Progress Administration.
The WPA hired millions of people out of work through no fault of their own. The ranks of the unemployed then who got jobs included scores of visual artists, one of whom was Jackson Pollock.
Why did this hiring spree come to be? Was it the empathy of politicians, their big hearts in play?
The answer is that pressure from labor unions and other grassroots groups spurred President Franklin Delano Roosevelt to establish public-sector employment. With this street heat, he came to see and helped the business community to grasp the fact that if the private sector is unable to generate adequate jobs for the unemployed, it is up to the government to do so.
This is not a well-established narrative in popular culture now. That reflects powerful interests benefitting from an extreme capitalism of income and wealth inequality, and the over-all weakness of the working class in California and around the nation.
Meanwhile, the Golden State’s economy is failing to create enough employment, and the demand for UI grows. Washington’s lending is vital but not enough.
For an economy that works for all, the politics of employment creation is central. Such policy-making requires the active involvement of those on and off employer payrolls.
It is time to think outside of the box. How can the $2 trillion California economy create jobs when private-sector firms do not need to hire workers locked out of the labor market?
Local and state officials, with input from all of their constituents, blue, red, and independent, should collaborate to assess the facts of the jobs crisis. I know, this is easy to say, not so much to do.
All Californians out of work deserve a recovery that creates jobs for them. To this end, now is the time for public- and private-sector labor unions, and allied grassroots groups to agitate and educate for job creation policies.
They will not arrive otherwise.
Seth Sandronsky lives and writes in Sacramento. Email email@example.com
From The Progressive Populist, July 1-15, 2013
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